2021 (8) TMI 914 - HC - Income Tax

Validity of assessment order - imposition of penalty under Section 274 read with Section 271AAC(1) and penalty under Section 274 read with Section 270A of the Income Tax Act, 1961 - HELD THAT - This Court is of the view that Section 144B(1)(xvi)(b) mandatorily provides for issuance of a prior show cause notice and draft assessment order before issuing the final assessment order - Since in the present case no prior show cause notice as well as draft assessment order have been issued, there is a violation of principles of natural justice as well as mandatory procedure prescribed under Faceless Assessment Scheme . The impugned assessment order, notice of demand, show cause notice for imposition of penalty under Section 274 read with Section 271AAC(1) and penalty under Section 274 read with Section 270A of the Act, dated 22nd April 2021, are set aside and the matter is remanded back to the Assessing Officer, who shall issue a draft assessment order and thereafter pass a reasoned order in accordance with law - petition allowed by way of remand.

Summary

Issues:
Challenging impugned assessment order, violation of principles of natural justice, mandatory procedure under Faceless Assessment Scheme.

Analysis:
The petition challenges an assessment order, notice of demand, and show cause notice for penalties under the Income Tax Act, 1961. The petitioner argues that the assessment order was passed without issuing a show-cause notice and draft assessment order as required by Section 144B(1)(xvi)(b) of the Act. The petitioner contends that this omission violates principles of natural justice and the provisions of Section 144B.

The court acknowledges that Section 144B(1)(xvi)(b) mandates the issuance of a prior show cause notice and draft assessment order before the final assessment order. The court emphasizes the importance of following the procedure laid down under the Faceless Assessment Scheme. Since no prior show cause notice or draft assessment order was issued in this case, the court finds a violation of natural justice and the mandatory procedure.

Consequently, the court sets aside the impugned assessment order, notice of demand, and show cause notice for penalties. The matter is remanded back to the Assessing Officer, instructing them to issue a draft assessment order and then pass a reasoned order in accordance with the law. The court disposes of the writ petition and pending applications with this direction.

The court orders the immediate uploading of the order on the website and directs that a copy of the order be forwarded to the learned counsel through email.